Monday, August 24, 2009

Ooh, Matt told a fib

Link here

The bills I’ve seen all phase-in in the future precisely in order to meet the goals of deficit neutrality without involving a mid-recession tax increase. Meanwhile, it seems extremely likely that the economy has already returned to growth. But evidently Lieberman’s been too busy talking to TV bookers to learn about the pending legislation.

Francois' response: Maybe it's not a fib, because it's unlike Matt to make shit up. But it's hard to believe that someone as well-informed as he is would believe that the bill phases in the changes in 2013 because they want to avoid a mid-recession tax increase. The purpose of having the bill take effect in 2013 is to muck around with the 10-year budget window, a point which Matt has posted about before, so he must know about it.

Also, I could be mistaken, but the revenue measures were supposed to take effect right away. It's the benefits that don't start until 2013. Otherwise, why would the CBO score a plan from 2009-2019 when not a single part of it even exists until 2013?

Matt on compromise

Link here

Now of course that leaves aside the question of whether the country can really be governed on this basis. Sometimes to advance a progressive agenda, you might need to embrace some politically dicey ideas. Then you might hope that you could acquire some political cover from members of the opposite party. Of course they won’t just do that to be nice, so you make some substantive ideological concessions to the right. You propose, for example, a health care package that would raise taxes and extend coverage to the uninsured (woo liberals!) but also slow the rate of growth in Medicare, hoping that some substantial number of conservatives will find the latter attractive.

Francois' response: Conservatives would love to cut Medicare. But so would liberals, because Medicare threatens the budget. Liberals aren't giving conservatives anything, they are just finding a small piece of common ground and then acting like they are making a concession.

If Democrats really want to tackle Medicare, then Republicans will cooperate. A bipartisan bill to cut Medicare, a standalone bill, would pass. And there's not a whole lot the elderly or the AARP could do about it. Where would they go?

But Democrats don't want to tackle Medicare without getting something bigger out of it: an expansion in coverage. This is a horrible deal for deficit hawks of either party, because if Medicare savings is $500 billion, and the bill costs $1 trillion, then we're out $500 billion. For deficit hawks, the status quo is better.

If liberals really want a compromise, and if health care for all is truly the defining Democratic priority for this century, then they should be willing to pay dearly for it: $500 billion out of Medicare, and $500 billion out of other domestic programs currently in the budget. No new taxes. That's a program that would draw many Republican votes. I personally would even agree to single payer for that, provided rules were put in place(like a spending cap with teeth) to prevent the spending from being jacked up later.

So how about? Single payer in exchange for $1 trillion in domestic spending cuts? How important is this to you guys, really?

Saturday, August 22, 2009

Yglesias on supply side theory

Link here

Greg Mankiw links to this approvingly under the banner “We Are All Supply-Siders Now.” And it’s true that this is Piketty pointing to a “supply side” effect. On the other hand, the distinctive contention of the supply-siders is that lower taxes on the rich are the key to economic growth. In reality, economic growth was much stronger in the 30 postwar years than in the past 30 years of the low-tax era.

Francois' response: Focusing on tax rates is pointless. Despite the fact that the top tax rates in theory ranged from 70 to 91%, the government took in significantly LESS revenue during that period than they did later, when rates dropped into the 50s. Loopholes can make even 200% tax rates into 10% effective tax rates.

Growth was better then, in part because taxes and spending were LOWER. Plus of course there were a ton of other factors, but claiming that a horribly designed tax system was good for the country is just bogus. Any economist will tell you that a flatter system with few deductions is more efficient for gaining revenue and for promoting growth than a loophole ridden progressive monster of a tax system.

Matt on long-term deficits

Link here

How to deal with long-term deficits is, of course, complicated and controversial. And yet it’s also in a way quite simple. We need to reform health care to slow the cost growth of Medicare and Medicaid. We need to steadily reduce defense spending as a share of GDP. We need higher taxes. And we need to reform the tax code to make it more efficient so that the higher taxes are economically viable. Given continued economic growth, future Americans will enjoy both more public services and more private consumption than current Americans.

Francois' response: First, reforming health care to cut costs is a dream. There are no cost-cutting measures in HR3200, and none are likely to survive. IMAC is the only way to cut costs and that's not going to pass in a million years now that the elderly know about it, even if they think it's a "death panel".

Second, while I'm all in favor of cutting defense spending, probably even more sharply than Matt, I would be appalled at the idea of cutting defense spending while leaving domestic spending alone. Defense spending is the one thing that citizens can never do for themselves. It's also the one thing that all the other programs depend upon, because without our independence and security, we can't have things like Head Start and food stamps. Ask Leon Blum about all the good social programs do when your country is occupied.

Third, higher taxes? Seriously? We're overtaxed as it is. Matt himself has admitted that you can't just tax the rich and get serious revenues. But the reason middle class tax increases are a political problem is because middle class people can't pay anymore than they do now.

Give up the dream, folks. If the state has a real budget crisis like California, the progressive project is over, finis, done, toast. We'll be electing a string of Calvin Coolidges and Grover Clevelands for the next century if that happens. "Economy" will be the end-all and be-all again.

In 1933, FDR saved capitalism from itself. In 2012, a Republican President may very well have to save progressivism from itself. Progressives are going to have to learn about a little thing called prioritization. Do you want people to be able to retire at 65? Do you want people to have generous health care coverage? Do you want kids to get a good education? Do you want poor people to have decent lives? Not all of those are possible right now. Maybe in the future, but not now. Pick 2 or 3 of those. If you try to do them all with $3 trillion in possible revenue, you'll bankrupt us all. Then where will your "social justice" be?

Yglesias on rushing health care reform

Link here

Since late July, it’s been clear that the strategy for killing health care reform is to delay it first. And it’s clear that killing health care reform is the top priority of the Republican Party leadership.

Francois' response: It's true that Republicans want to delay it so that it will die. It is also true that Democrats want to rush it through Congress before the public has had time to digest what's going on. If the bill had public support, then it wouldn't matter how long it took to get it done. Heck, it doesn't go into effect until 2013! You can wait until 2011 to pass it if you want and still have plenty of time to lay the groundwork.

Matt's been bitching about the fact that the bill isn't being rushed fast enough, he's bitching that it can't be passed with only 50%+1 of the vote in Congress. Then he starts acting as if he's more pro-democracy than the rest of us while he's trying to get a bill passed that only 35-40% of Americans favor. It's all understandable though. Health care is a top priority for liberals and they have a lot of emotion invested in it. Even many of the good liberal commentators are losing their heads over it, saying things which they would normally know to not be true, and rationalizing breaking the rules to get it passed(like leaning on the parliamentarian).

The number one rationalization is that Republicans just want to kill any health care bill. Yes, some do. But some don't. There are votes that can be picked up. Why not call the GOP's bluff and bring the Demint bill to a vote? Or the Coburn bill? Both would be better than the status quo.

Is this about giving Americans better access to health care and cutting costs, or is it about a political victory? If so, then Democrats are behaving no differently from Republicans. They'd rather see no health care reform rather than Republican health care reform.

Tuesday, August 18, 2009

Kevin Drum on Bernanke

Link here via Matt

Kevin Drum observes that Ben Bernanke’s reappointment seems extremely likely:

Ain’t the intertubes great? On a more substantive note, not a single one of the panelists was opposed to reappointing Ben Bernanke. Not even Dean Baker! Et tu, Dean? This suggests to me that Bernanke is a shoo-in for winning a second term. If you can’t even get a bunch of liberals at Netroots Nation to oppose him, what are the odds that anyone else is going to lead the fight?

Francois' response: I don't get what liberals are asking for here. Traditionally, liberals have wanted inflationary monetary policy, but they won't really say what they want now, just that they don't want Bernanke or another conservative. They want someone more liberal, like Summers. But they won't say what they actually want a liberal fed chairman to do. Could someone explain what they want the Fed to do differently?

A handy little flowchart that happens to be deceptive

Link here

The changes the administration is proposing to make to health insurance in the United States are more complicated than some alternative plans might be. But honestly they’re not that complicated when broken down in a smart way. This health reform flow chart is great:


Francois' response: problem is, that doesn't tell the whole story. No change to Medicare recipients? That will be a nice trick, $500 billion in cuts with no change to benefits. Don't get me wrong, I think it's possible, but Democrats aren't credible on Medicare savings because they've never tried to save serious money in Medicare before. Again, prove you can fix Medicare before messing around with a public option. Insurance reform, that's a good idea and long overdue. An exchange, also good. But no more government-run plans until they can control costs without damaging care.

Then there's the promise that if you already have insurance through your employer that there will be no change. The CBO says something else entirely. 6 million will lose their insurance.

This is why people believe Republican lies. Because Democrats aren't telling the whole truth.